Four hotels are under construction in the Northwest Austin region and are expected to open by the end of 2013, helping to satiate a growing demand from the technology, convention and hospitality sectors for more hotel rooms.
The Northwest Austin area has more than 40 hotels ranging from extended-stay to full-service, and there are 260 hotels and nearly 30,000 hotel rooms in the Austin metropolitan statistical area from Georgetown to San Marcos. At least four other hotels are in various stages of planning in Northwest Austin.
Saeed Minhas, president of MKM Hotel Group, which is planning a Staybridge Suites off of I-35 and Parmer Lane, said the Austin market has been underserved by hotel rooms. It did not take his company long to purchase the franchise rights for a new hotel from InterContinental Hotel Group, which owns the franchise, Minhas said.
"There's a growing number of requirements here for hotels," he said of the demand for more hotels. "That is why [hotel groups] are pushing for hotels."
In 2002, the Austin MSA had 216 hotels with 24,000 rooms. The City of Austin collects a 9 cent hotel occupancy tax, and expects to collect almost $51.5 million in fiscal year 2013, which is an increase from 2010 when the city collected $40.8 million.
Driving the growth of the hospitality industry is the increasing interest in conventions and events such as the United States Grand Prix that took place Nov. 16–18. Few new hotels opened in Austin in the past several years because of the economy.
The growing tech industry, with companies such as Apple Inc. planning expansions, has been a big driver for developers and hotel groups to propose new hotels and concepts in Northwest Austin, Minhas said.
Chirag Patel, managing director with Austin-based Pathfinder Development, plans to open a Holiday Inn Express at Research Boulevard and Braker Lane next summer. That project broke ground in mid-November. The hotel will have a saltwater pool, cabanas and a grill as well as 1,700 square feet of meeting space for corporate events and small weddings.
"We felt like in the non-full-service hotels, there wasn't a lot of meeting space," he said.
Because of the various zoning overlays and a lengthy permitting process, Patel said developing a hotel takes longer in Austin. The idea for his project started in 2009, and he had to ensure that the plans followed additional requirements for being located in the North Burnet/Gateway master plan, which has its own regulation plan for 2,300 acres bordered by Metric Boulevard, US 183, Braker Lane, MoPac and Walnut Creek.
"Austin is a difficult market to develop in, and it takes more wherewithal and patience," Patel said.
Many of the prospective hotels are incorporating various aspects of Austin culture and the city's values. Lone Star Court, which is under construction on Domain Drive in The Domain, will have its own food trailer court with two to three food trailers. Guests would also have access to a dipping pool and live music by an outdoor fire pit.
"They're going to feel like they're in Austin when they're in North Austin," said Amy Trench, director of brand marketing for Valencia Group, which is building the hotel.
In choosing Austin for its new retro Americana concept, Trench said Valencia has a history of building hotels on mixed-use sites.
"We selected Austin for a few reasons. Aside from Austin being one of the fastest-growing cities, it is an eclectic city and one that is ready for this authentic Americana court concept," she said. "We feel Austin is a great place to introduce this concept."
A.K. Patel, a managing principal with Chatworth Ltd., which is planning to break ground on a Home2 Suites by Hilton in February, said Austin's penchant for eco-friendly development is one reason that drew him to Austin. His company is based in Amarillo, but he said he is relocating early next year.
Home2 Suites has a focus on being environmentally friendly by using recycling collection stations, Energy Star–rated appliances, and countertops and flooring made mostly from recycled materials in its hotels, according to its website. A.K. Patel said the new hotel will have charging stations for electric vehicles and an all-electric shuttle that will take guests to nearby destinations.
In choosing a location for the new concept, he said the proximity to retail at The Domain and tech giants such as IBM were reasons for choosing the location at Burnet Road and Esperanza Crossing. The hotel is part of a larger 40-acre development that will include golf entertainment complex TopGolf, the hotel and a multifamily residential project. The site will have a similar feel to The Domain and have bike lanes and pedestrian access to The Domain, said Jason Thumlert, development associate with Endeavor Real Estate Group, which is developing the property.
A second Home2 Suites began construction three months ago just south of the new H-E-B Plus that opened at Research and Lakeline boulevards. The hotel is expected to open in May.
"The client liked [the concept] and thought it was new and fresh," said Ben Turner, principal with Consort Inc.
Consort, a planning, engineering, entitlements and landscape architecture firm, is working with Pure Lodging Hospitality to develop the hotel. Pure Lodging is also planning an Aloft Hotel adjacent to the Home2 Suites, and Turner said that project is in development.
The right market
Since June, two new site plan applications were filed with the City of Austin for proposed hotels. One of those was by Champion Hotels to develop a 2.17-acre site at Pecan Park Boulevard and RM 620 called Pecan Park Hotel. The website for Champion Hotels, which is headquartered in Oklahoma City, indicates the hotel could be a franchise of Courtyard by Marriott. The site plan indicates that the hotel would have 118 rooms. The city is still reviewing the plans and has not yet approved the hotel.
According to the site plan, "the previous site plan was mostly built out and consisted of office buildings, restaurants and associated infrastructure and parking areas, but the lot including Pecan Park Hotel was left undeveloped."
Another hotel, Fairfield Inn & Suites at Research Boulevard and Hunters Chase Drive, is under construction and will open in March, according to the website of Excel Hotel Group, which is developing the hotel.
Minhas' hotel, Staybridge Suites, will have five stories and 121 suite-style rooms that will have a living area and kitchen. He said that if the permitting process goes smoothly, he would like to start construction in about six months. The hotel would take a year to build, he said. Minhas said he expects guests will choose his hotel because of its proximity to Dell Inc., Samsung and other technology companies bringing in out-of-town clients.
In researching for potential locations, he said Austin's hotel occupancy rate of 70 percent to 80 percent was a factor. In 2011, downtown Austin had a 75.1 percent average occupancy rate, and the entire city had an occupancy rate of 66.5 percent, according to data from the Austin Convention & Visitors Bureau. Dallas and Houston had occupancy rates of 59 percent and 60 percent, respectively, according to the data.
Chirag Patel said the market can support new hotels because other competitors are 10–12 years old.
"Northwest Austin is just a growing part of town. I would say it is similar to the Galleria in Houston," he said. "When people come to Austin, they want to stay downtown or in the Arboretum area."